London Forex Report: Markets Await Yellen & Draghi

London Forex Report: Markets Await Yellen & Draghi

London Forex Report: Global financial market is mostly in holding pattern ahead of key Jackson Hole monetary policy symposium. The theme for this year’s Jackson Hole Monetary Policy Symposium is “Fostering a Dynamic Global Economy”. Federal Reserve Chair Janet Yellen is scheduled to make her Opening Remarks at 3pm BST. European Central Bank (ECB) President Mario Draghi will deliver his Luncheon Address at 8pm BST

USD data was mixed yesterday. Initial jobless claims for the week ended 19 Aug increased 234k, up slightly from the 232k gain in the previous week. The figure was better than an expected gain of 238k. Manufacturing sector in the Kansas City Fed district grew at a quicker pace in Aug, indicated by the index that jumped to 16 from 10 in Jul, bypassing the expected rise to 11. Housing sector remains on a softer tone nonetheless, as existing home sales fell 1.3% MoM in Jul after a 1.8% decrease in Jun

EUR Comments from ECB GC member Hansson convey a reduced level of concern relating to recent EUR strength and Bundesbank President Weidmann’s German media interview has suggested that the EUR’s rally is ‘an expression of relative economic strength’. EUR remains bound around the midpoint of its August range, trading above levels implied by the 10Y Germany-U.S. yield spread at –180bpts. EUR risk reversals appear to be shifting bullish following their recent moderation to neutral levels

GBP No surprise in UK advance 2Q GDP as expansion paced at 0.3% QoQ, steadying from 1Q figures. Private consumption growth slowed to 0.1% in 2Q, dipping from 0.4% previously but better than expected government spending (2Q: +0.6% vs 1Q: +0.7%) and rebound in exports (2Q: +0.7% vs 1Q: -0.7%) kept the headline figure unchanged. Investments also grew more than expected though softer than before (2Q: +0.7% vs 1Q: +1.0%). Annually, GDP increased 1.7% YoY in 2Q, also unchanged from 1Q.

JPY Leading index in Japan climbed less than initially estimated to only 105.9 in June according to the final print, still the best in two years nonetheless. This, coupled with improvement seen in recent indicators, bolstered expectations the Japanese economy is on firmer footing, but far from solid.

EURUSD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – Bullish consolidation continues tests of bids just below 1.17 attract buyers, as this level contains downside reactions bulls look for a retest of cycle highs en route to 1.20, near term upside hurdle sited at 1.1850, only a daily close below 1.1620 concerns the near term bullish bias setting a top for a test of 1.1440.

1-3 Week View – 1.1876 achieved focus shifts to 1.20 . Weekly close below 1.14 neutralises bullish objectives.
Retail Sentiment: Bearish
Trading Take-away: Long

GBPUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Neutral

Technical: 1-3 Day View – Expected retest of 1.28 plays out, near term resistance is sited at 1.2910 and as this contains upside reaction 1.26 is the next downside objective, only a close over 1.3030 reestablishes near term bullish tone

1-3 Week View – The weekly close above 1.3045 targets the broader symmetry swing objective sited at 1.3263 only a close back below 1.28 would jeopardise the bullish advance.
Retail Sentiment: Bullish
Trading Take-away: Short

USDJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: 1-3 Day View – Near term resistance sited 109.85 over this hurdle opens a move to test 110.60 ahead of pivotal 111.65 a close over here neutralises downside pressure, near term support sited at 109.30

1-3 Week View – As 108.40 equidistant swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 negates the broader bullish theme and opens the psychological 100 magnet
Retail Sentiment: Bullish
Trading Take-away: Short

EURJPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bullish

Technical: 1-3 Day View – Support at 128.00 under pressure again the failure to recapture 1.30 on a closing basis sets up a retest of 126.90 and failure here sets a top for retest of 125.80. The daily close over 128.80 stabilises the pair and resets attention on upside objectives over 1.30

1-3 Week View – The weekly close above 118.50 arrested the immediate downside risk, 129.44 upside objective achieves as 128 supports bulls look for a move to test 133.36 as the broader upside objective.
Retail Sentiment: Bearish
Trading Take-away: Long

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